Warren Buffett did his annual "Ask Warren" appearance on CNBC's "Squawk Box." Here's what happened.
 | MON, FEB 24, 2020 | | | WARREN BUFFETT WATCH
CNBC interview special edition | | | | | Buffett on CNBC: First, some video highlights ... Warren Buffett was live on CNBC's Squawk Box for three hours this morning. He and Becky Quick covered many topics, including his thoughts on Democratic presidential contenders Bernie Sanders and Michael Bloomberg, sub-zero interest rates, "reaching for yield," Bank of America vs Wells Fargo, cyrptocurrencies, and the new smart phone that's replaced the flip phone he had for years. Here's a 5-minute clip with some of the highlights, starting with Buffett's reaction to what was then an expected 3% drop for stocks today due to fears of a coronavirus pandemic. (The Dow did indeed close with a loss of 1031 points, or 3.6%.) - Buffett said the possibility of a coronavirus pandemic is "scary stuff," but it shouldn't affect buying decisions. "I don't know how many 3% declines I've had in my lifetime, but there are a lot of them, and I can't think of one you shouldn't have bought on ... if you like to own American businesses, you're getting a chance to buy it 3% cheaper."
Will Berkshire be buying stocks today? "We certainly won't be selling. Yeah, we could easily be buying something, sure." - Buffett acknowledged that some Berkshire subsidiaries, like Dairy Queen and carpet-maker Shaw Industries, will be affected by the outbreak, but noted they're affected by lots of other things, too.
- Buffett expressed reservations about Democratic front-runner Bernie Sanders, but said he would have "no trouble" voting for Michael Bloomberg.
He agrees with Sanders that the country needs to do more to help people left behind economically, but we shouldn't "destroy capitalism" in the process.
He said he wants to see who gets nominated. "I'm a Democrat, but not a card-carrying Democrat."
Left unaddressed: would Buffett vote for Trump if Sanders is nominated? - Buffett implies he prefers Bank of America to Wells Fargo as an investment, acknowledging that Berkshire's BAC stake has been getting bigger while its Wells Fargo stake is shrinking. Is he cutting back on WFC due to its "fake account" scandal? "Not specifically."
- "Reaching for yield" (taking on more risk in hopes of higher returns than prevailing interest rates) is "stupid" but "human." It's better to adjust consumption when income falls than try to increase income to match consumption.
- Buffett says portfolio manager Todd Combs is working to better calibrate risks with premiums at GEICO and won't be its CEO for a long time. It's "not a permanent career shift" although Buffett doesn't know how long Combs will be there.
- The two small positions in S&P 500 ETFs listed in Berkshire's portfolio snapshot are related to pensions and were not purchased by Buffett or one of the two portfolio managers.
- Buffett said it's "very unlikely" Berkshire will buy an entire airline because it's a regulated industry and that means there are lots of "complications." He also said that of Berkshire's four big airline stakes (American, Delta, Southwest, and United), he bought three of them and a portfolio manager bought the fourth. He didn't say which is which.
- Asked about his recent meal with TRON's Justin Sun and four other cryptocurrency entrepreneurs, Buffett said there was a "very friendly exchange of ideas," but he still thinks cryptocurrencies "basically have no value." And he admitted he didn't change Sun's mind either. (Sun made the winning $4.6 million bid for a meal with Buffett, with the money going to a San Francisco charity.)
- Buffett called Apple "probably the best business I know in the world." At $74 billion, it's Berkshire's biggest stock holding. But, says Buffett, he doesn't think of Apple as a stock. "It's our third largest business."
- Buffett reveals he has retired his trusty flip phone and now uses a smart phone. He doesn't, however, use any of its features. He just uses it as a telephone. While he didn't explicitly identify the brand, he strongly implied its an iPhone given to him by Apple CEO Tim Cook.
But wait, there's more ... The CNBC "Squawk Pod" did a "super-sized" edition today with just over one hour of audio highlights. There's also some "extra" material that wasn't part of the live interview, including Buffett talking about how he tried to trick Bill Gates with some unusual dice. And for those who want it all ... At two hours and 57 seconds, here's the whole interview: Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.) If you aren't already subscribed to this newsletter, you can sign up here. We'll be back Friday when the next Buffett Watch newsletter. -- Alex Crippen, Editor, Warren Buffett Watch |
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